McKinsey & Company has issued a new report that suggests that autonomous ships are but one change likely to occur over the next 50 years.

McKinsey & Company has issued a landmark report predicting sweeping changes amid steady growth in the container shipping industry over the next 50 years. The analysis by Steve Saxon and Matt Stone reads like a self-conscious sequel to the famous 1967 McKinsey forecast of container shipping that predicted homogenized cargo, a forthcoming boom-and-bust cycle driven by over-expansion, and 10,000-TEU ships at a time when maximum container-vessel capacity was 1,000-TEUs.

The forecast takes note of the current situation of the container shipping industry. Since the global recession that began in 2008, TEU growth has slowed and fallen more in line with GDP growth—the ratio of TEU growth to GDP growth shrank from 3.1x from 2001-7 to 1.7x from 2011-6. Meanwhile, container shipping capacity has continued to concentrate in the largest five carriers over the past 20 years: the largest five carriers handled 27% of all TEUs in 1996, 46% by 2008, and 64% in 2017. The future of consolidation in container traffic will also change as shipping alliances give way to outright mergers & acquisitions.

There are obvious challenges to robust long-term TEU growth. These include everything from a potential great-powers rivalry between China and the USA that would encourage a new wave of on-shoring, to the fact that some sectors have already been completely containerized (electronics, medicine, apparel) while others have been static for decades (automobiles and non-refrigerated agricultural goods have been stuck at 25% and 12% containerization, respectively).

While acknowledging these factors, McKinsey feels confident that ‘peak container’ is nowhere in sight and has issued low-case and high-case forecasts for global TEU growth. In the low-case scenario, container capacity grows from 182M TEUs in 2016 to 464M TEUs by 2066, representing a conservative growth rate of 1.9% per annum. In the high-case scenario, container capacity grows to 858M TEUs by 2066, representing an optimistic growth rate of 3.2% per annum. Depending on future fuel costs, which affect the efficiency advantages enjoyed by ever-larger container ships, we could see orders for 30,000-TEU ships within 10 years, or delayed for up to 20 years if prices remain low. Geographical factors also constrain the upper limit on container ship capacity: the most current designs for proposed 24,000-TEU vessels have a depth of 16 meters, allowing them to transit the Strait of Malacca (min. depth: 25 m) and the Suez Canal (min. depth: 24 m).

Fully automated processes at ports like TraPac’s terminal in Los Angeles and the ship-to-shore crane operations of APM Terminals at Rotterdam are already in place, and McKinsey expects container shipping to be fully automated by 2066. McKinsey sees wholly automated terminal and inland operations with self-driving trucks arriving just in time to pick up boxes that have been digitally pre-cleared by customs. Extending autonomous systems to the ships themselves would reduce labor and fuel costs per container while increasing capacity per ship.

Notwithstanding the advances of the past 50 years, McKinsey identifies numerous systemic inefficiencies still plaguing the container shipping industry: a lack of market transparency, too many handovers between providers, cumbersome document flows, costly manual processes, lengthy and painful customer interactions, to name a few. McKinsey’s forecast tracks the explosion of digital startups tackling these issues and sorts them by value source, including rate analytics firms like Freightos and Logistitrade to exchange platforms like Truckstop and cloud-based optimization systems like CargoSmart and LeanLogistics. McKinsey expects increased disruption by digital start-ups and additional moves by tech giants like Amazon, Alibaba, and Uber, warning carriers and terminals of the risk of becoming “dumb pipes” for players that take over and extract value from customer relationships.

Despite the wealth of data marshaled by analysts in service of these predictions, McKinsey realizes that its forecasts are still governed by important unknowns. To its credit, McKinsey highlights some of the whiffs made in its 1967 prediction, like estimating that a maximum of 25 container vessels could handle all of the European/North American general cargo trade. In light of those past missteps, in the 2017 forecast McKinsey considers the future of Indian growth an open question. Will India reach ‘escape velocity’ by improving infrastructure, reforming markets, and dismantling trade barriers, or is it unlikely that China’s achievements over the past three decades can be repeated? Unknowables like the future dynamism of developing economies and how an increasing emphasis on recycling and reuse of materials might affect intercontinental transport are mentioned, but wisely left unresolved in McKinsey’s latest landmark forecast of the container shipping industry.

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